Will the crypto boom continue in 2024?  

The cryptosphere has had a fantastic year, outperforming other asset classes by a wide margin. But will this momentum continue, and what are the underlying factors behind it? Let’s see what analysts forecast.

The vast majority of analysts are confident that Bitcoin still has upside with forecasts ranging between 50,000 and 180,000 dollars, compared to 42,349 dollars on Dec 31. So do altcoins, whose rally took off somewhat later than that of Bitcoin.

Here are the key drivers likely to fuel the ongoing demand for cryptocurrencies:

·       Billions of dollars are expected to flow into the spot Bitcoin exchange traded funds (ETFs) filed by a dozen of leading asset managers once they have been approved by the Securities and Exchange Commission (SEC). Inflows as high as 40 to 100 billion dollars within five years of launch have been mentioned. A decision is expected imminently, by Jan 10 at the latest. Approvals would not only add a layer of legitimacy to Bitcoin, but also attract institutional investors.

 ·       Ether’s Dencun (EIP-4844 upgrade) on Jan 17. This upgrade will cut transaction costs and improve scalability, through changes across its execution and consensus layers.

 ·       Interest rate cuts by the world’s central banks as early as March. Lower rates make riskier assets such as cryptocurrencies more interesting to hold, as they are more likely to generate higher returns than safer ones such as bonds and treasuries.

 ·       The expected rate cuts will also make it cheaper to borrow money, which in turn encourages companies and consumers to spend and/or invest more, indirectly boosting asset prices.

 ·       Lower interest rates typically weaken the relative value of the currency of the country concerned, marking another opportunity for cryptocurrencies.   

 ·       Bitcoin’s upcoming halving, which will take place around April 23, according to the calculations made by the crypto analytics firm Glassnode. Read more about this event here.

 ·       The upcoming US elections in November. Pro-crypto voters hope that a Republican or Donald Trump will regain the presidency as the SEC’s hostile regulatory approach in this scenario is likely to be dismantled. But even a Democratic victory could support cryptocurrencies, as some investors could allocate their assets in crypto coins as a safe haven, as some investors could allocate their assets in crypto coins as a means of diversification.

 ·       New fair value accounting rules in the US are likely to make companies more likely to hold some of their assets in cryptocurrencies. These rules will enable them to record impairments when the value of their crypto assets fall and book gains when their value rises.

 ·       Demand from countries such as Argentina, Egypt, Lebanon, Nigeria, Pakistan and Turkey where inflation remains rampant. Cryptocurrencies are used to hedge against inflation there.

 ·       Gen X (1965-1979) and Millennials (1980-1994), who are more inclined to invest in cryptocurrencies, gradually inherit the trillions amassed by their parents.

Risks ahead:

 ·       Spot Bitcoin ETFs being rejected by the SEC

 ·       New regulations hampering the growth of the crypto universe

 ·       Fraud and hacking hitting investors’ confidence in the cryptosphere such as the collapse of FTX in November 2022

·       A deteriorating geopolitical situation in the Middle East, Eastern Europe, Asia (or elsewhere) causing financial markets to crash or unexpected crisis such as a new pandemic

·       An unexpected recession
·       Inflation picking up, triggering rate hikes

Bitcoin price forecasts (for 2024, if no other period is mentioned)

10xResearch: $50,000

Adamant Research: $120,000 (at the peak of the ongoing cycle)

Amberdata: ~ $50,000

Bitget: $100,000 (at the peak of the ongoing cycle)

Bitwise: > $80,000

ARK Invest’s CEO Cathie Wood: $650,000

Changelly: ~ $63,000

FundStrat: $150,000-$180,000 (conditional on ETF approval)

Matrixport $125,000

 Mobius Capital Partners: $60,000

Standard Chartered: $100,000

VanEck: $100,000